The FCC Is Going To Ruin The Internet This Week

FCC Chairman Tom Wheeler.
AP
On Thursday, the FCC will vote on new rules that will have lasting effects on the way broadband internet in the U.S. is regulated.

On one side, you have the internet service providers (ISPs) like Comcast and Verizon, which want to keep their control of broadband and potentially use it to favor their own internet services over competing services. On the other side, you have proponents of net neutrality who believe the internet should be treated as a government-regulated utility to help foster innovation and economic growth.

FCC chairman Tom Wheeler has already pre-announced his proposed rules, and while they attempt to appease both sides of the debate, they still heavily favor the ISPs' position and have the potential to damage the future of internet innovation in this country.

Unfortunately for everyone but the ISPs, there's a good chance Wheeler's proposal will go through.

This Is What Wheeler Wants

Wheeler's proposal says streaming content companies like Netflix, Hulu, HBO GO, etc. should be allowed to pay Internet providers for "direct access" to customers. This is something Netflix is already doing with Comcast and AT&T, and it has resulted in faster streaming speeds for customers on those networks.

However, the proposal also attempts to protect other services that can't or don't want to pay for direct access to customers. If the FCC approves the rules, Internet providers will not be allowed to slow down streaming speeds. It will have to treat those services like all other data, even if they eat up more bandwidth than simple activities like browsing Business Insider.

This, in effect, creates a fast lane and a slow lane. The fast lane is for companies that can afford to pay for direct access to an ISP. The slow lane is the rest of the internet.

This Is Why Wheeler Is Wrong

The proposal is an attempt at making both sides happy — ISPs will get more money from streaming services that want direct access to customers and other services won't have to worry about slowing down.

But it's not the right solution.

It gives companies with gobs of cash like Netflix an advantage over the next generation of internet services. There's little chance a startup will be able to afford to pay every ISP for direct access to consumers. As Wheeler's proposal stands now, it'll allow the established streaming giants to survive, grow, and dominate, while stifling competition from poorer startups and services that have the potential to become the next Netflix. And that's bad for you because it puts those big companies in a position to charge you whatever they want without having to worry about you ditching the service for a competitor.

It's a sham, a way for the FCC to pretend it'll make sure all internet traffic will be treated equally. But in reality, the wealthy internet media companies will be treated more equally than the rest.

This Is What The Internet Providers Say

This week, the CEOs of several major ISPs, including Comcast, AT&T, and Verizon, signed signed a letter opposing any FCC decision that even smells like a free and open internet.

It's the typical "get your meddling hands out of our business" diatribe against any form of government regulation written by a bunch of dominant companies. In fact, according to the letter, mandating any sort of net neutrality would create a slippery slope where companies have to ask "Government, may I?" before trying to come up with new innovations. That, the CEOs say, would harm innovation.

This Is Why The Internet Providers Are Wrong

The slippery slope argument goes the other way too. There's a lot of consolidation happening in the industry. If and when Comcast gets approval from the Department of Justice to buy Time Warner Cable for $45 billion, it'll control 30% of the country's broadband internet and cable TV access. AT&T is also closing in on a deal to buy DirecTV for $50 billion.

Comcast itself is a content provider thanks to its acquisition of NBC Universal a few years ago. Giving it and other ISPs the freedom to favor their own streaming content over other services is again harmful to competition and could likely result in higher prices for you.

Meanwhile, ISPs are arguing that they are continuing to invest in ways to provide better and faster broadband access to more people. As Matthew Yglesias of Vox points out, lobbyists for the National Cable Telecommunications Association (NCTA) are passing around a letter to congressmen that says the only reason why broadband has been able to expand so quickly is because the companies didn't have to undergo any government regulation.

But the letter is counter to the NCTA's own figures of broadband infrastructure investment, which has actually slowed down in recent years. The cable industry spent $17.65 billion on broadband infrastructure from 2005 through 2008, but that investment dipped to $12.24 billion from 2009 through 2013.

Meanwhile, the U.S. is far behind several other countries in terms of its broadband infrastructure. Japan, the Netherlands, and the Czech Republic all have faster average Internet speeds. In South Korea, which typically ranks the highest in broadband internet speeds, has free, super-fast WiFi just about anywhere you go, from coffee shops to the airport.
Average internet speeds by country.
Akamai
It's because those countries recognize the real value of the internet, a public utility that fosters innovation and economic growth. The U.S. ISPs clearly don't see the internet that way.

Which leads us to...

The Real Answer

The FCC is open to classifying broadband internet as something called a Title II service, which is the same distinction given to phone lines back in the dialup internet days. In essence, Title II would turn broadband internet into a utility, something that's important enough to communication, economic growth, and innovation to be regulated by the government just like phone lines are.

If that happens, it's going to make a lot of rich CEOs angry, but it's going to be great for consumers. It'll help guarantee affordable broadband internet access. It'll help guaranteed poorer communities won't be disenfranchised if they can't afford access to information on the internet. It'll help guarantee future entrepreneurs will be able to develop innovative new services and ignite competition with established entities, keeping prices down for you.

And finally, it'll keep the U.S. competitive in a globally, especially in countries that are already kicking its butt in terms of free and open internet access.